Our Services - Corporate services - Making an Acquisition / Investment

Advice on Deal Structuring

There are many factors to consider when determining an appropriate deal structure.  Key points for owner managed businesses are:

• Do you buy or sell the shares in the company or the trade and assets of the company?

Selling the company may qualify for Entrepreneurs Relief but a buyer may prefer to take on the trade and assets without the liabilities and history of the company.

• If you buy the trade can you ensure that any historical tax losses will be available for relief against future profits?

• Should the consideration be paid on completion or a portion be deferred, for example by way of vendor loan notes? 

There may be commercial advantages to the acquirer from doing this, particularly as banks have tightened their lending criteria.  Likewise, for the vendor this can be more tax efficient.

• Should the consideration comprise an earn-out clause?

This is where an element of the total price is contingent on future performance and is often used to incentivise a selling owner to remain in the business and ensure key customers are not lost when the selling owner exits.

• A vendor should consider the inheritance tax implications of a sale. 

Potentially on the sale of a business that qualified for business property relief, a vendor can see their chargeable estate for IHT significantly increase in value.

• Has the vendor minimised their tax liability?

Ensuring that the vendor is taking full advantage of all the tax reliefs available to minimise their tax liability can have an impact on the final deal price.